INSURANCE REGULATORY ANDJIM DEVELOPMENT AUTHORITY

Ref. 56/I R DA/Legal/U LI P-M F

Proceedings of the Chairman , Insurance Regulatory and DevelopmentAuthority of India ( IRDA)

The Securities and Exchange Board of India (SEBI) vide its OrderNo.WTM/PS/IMD/06/APR/2010 dated 9th April, 2010 issued by the Whole TimeMember has issued a direction to 14 insurance companies, (listed in theannexure to these proceedings) "not to issue any offer document, advertisement,brochure soliciting money from investors or raise money from investors by way ofnew and/or additional subscription for any product (including ULIPs) having aninvestment component in the nature of mutual funds, till they obtain the requisitecertificate of registration from SEBI. This order is without prejudice to any actionthat might be taken by SEBI in respect of offer documents or advertisementsissued by these entities for products (including ULIPs) having an investmentcomponent in the nature of mutual funds launched so far."

The IRDA observes that in the year 2008-09, 7.03 crore ULIP polices involving atotal premium of Rs.90645 crores were in force. Further, as on February, 2010,during the period 1-4-2009 to 28-2-2010, 16.7 lakhs policies have been sold witha premium of Rs.44611 crores. It is also observed that the 14 insurancecompanies have an equity capital of Rs.16281 crones as on 31st March, 2009.

The observance of the above referred SEBI order would cause the stoppage ofall renewals of insurance policies already invested by the insuring public, mayresult in the forced premature surrender of insurance policies causing substantialloss to the policyholder and to the insurers. The effective stoppage of the sale ofthe said products will cause a complete drying up of the revenue flows to theinsurance companies which could disrupt the payment of benefits on maturity, ondeath and on other admissible claims, putting the policyholder and the generalpublic to irreparable financial loss. The financial position of the insurers will beseriously jeopardized thus destabilizing the market and upsetting financialstability.

The IRDA is constrained to observe that earlier the SEBI had issued a notice tothese 14 insurance companies on the matter of non-registration. The notice ofSEBI was responded to by the individual insurance companies. The IRDA hadalso intimated to SEBI that the ULIPs are insurance products marketed by the

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companies licensed by the IRDA and each of the ULIPs and the conditionsthereto are specifically cleared by the IRDA having regard to the Insurance Actand the Regulations issued thereunder and that consequently, the action of SEBIis wholly misconceived and without jurisdiction.

The IRDA Act, 1999 is specifically enacted to provide for an Authority to protectthe interests of holders of insurance policies , to regulate , promote and ensure theorderly growth of the insurance industry and for matters connected therewith orincidental thereto.

The mentioned direction of the SEBI to insurance companies not to raise moneyby way of new or additional subscription apart from other restrictions willseriously jeopardize and adversely the interests of the policyholders and theinterests of the insurers.

The IRDA, in the light of the above , is satisfied that the order of the SEBImentioned above will bring the insurance industry to a standstill which would notbe in public interest and would be detrimental to the interests of the policyholdersand prejudicial to the interests of the insurers.

Therefore, in exercise of the powers vested in the Authority under Section 34(1)

(a) and (b) of the Insurance Act, 1938 , and after due consultation with the

members of the Consultative Committee , all the 14 insurance companies whichare mentioned in the order of SEBI are directed to note that notwithstanding thesaid Order of the SEBI, they shall continue to carry out insurance business asusual including offering , marketing and servicing ULIPs in accordance with the

Insurance Act, 1938, Rules , Regulations and Guidelines issued thereunder bythe IRDA.

Place : Hyderabad

Date : 10 .04.2010

Annexure

a. Aegon Religare Life Insurance Company Limited

b. Aviva Life Insurance Company India Limited

c. Bajaj Allianz Life Insurance Company Limited

d. Bharti AXA Life Insurance Company Limited

e. Birla Sun Life Insurance Company Limited

f. HDFC Standard Life Insurance Company Limited

g. ICICI Prudential Life Insurance Company Limited

h. ING Vyasa Life Insurance Company Limited

i. Kotak Mahindra Old Mutual Life Insurance Limited

j. Max New York Life Insurance Co. Limited

k. Metlife India Insurance Company Limited

1. Reliance Life Insurance Company Limited

M. SBI Life Insurance Company Limited

n. TATA AIG Life Insurance Company Limited